The automobile industry is going great guns, with sales still running well into the millions.
However, failure to service a loan agreement will result in car repossession. Car finance companies are licensed to repossess vehicles if you fall behind on loan payments.
Do you have a problem with paying back your car finance? What measures can you take to avoid a negative outcome?
Here’s a concise guide on everything you need to know about car repossession.
Contact Your Lender
If you struggle to make your car financing payments, it’s important to contact your lender as soon as possible. Many lenders will work with borrowers to find a solution that doesn’t involve repossession. You may modify your auto loan terms, make a partial payment, or enter a forbearance agreement.
If you don’t contact your lender, they may not be aware of your financial difficulties and may move forward with the repossession.
Sell Your Car
You can sell your car or go through a dealership. If you sell your car, you will need to advertise, show the car to potential buyers, and negotiate a price. A dealership will handle the paperwork and transfer of vehicle ownership if you are selling a car under finance.
You may not get as much money for your car this way, but it is a quick and easy way to avoid repossession.
File Bankruptcy
If you’re struggling to make your car payment each month, you may be wondering how to avoid car repossession. One option is to file for bankruptcy. This may seem like a drastic measure, but it can help you keep your car.
When you file for bankruptcy, an automatic stay goes into effect. This means that all collection attempts, including repossession, must stop. This gives you time to catch up on your payments or work out a payment plan with your lender.
Filing for bankruptcy also gives you the chance to get rid of other debts that may be putting a strain on your finances, such as credit card debt or medical bills. This can free up money to help you make your car payment each month.
Surrender the Car
If you find yourself in a position where you can no longer make your car payments, surrendering the vehicle may be the best option to avoid repossession. By voluntarily giving up the car, you can avoid the negative consequences that come with having the vehicle forcibly taken away.
This includes damage to your credit score and the headache of dealing with repo agents. To surrender your car, you will need to contact your lender and let them know of your intention. You will then need to sign over the car’s title and keys.
Once the surrender process is complete, your car will be sold at auction and you will be free from your loan obligation. If you think this is your last option, make sure to talk with your financial advisor and make sure you won’t hurt your credit score.
Explore Tips to Avoid Car Repossession
If your car is repossessed, you could face significant financial consequences. You may have to pay the balance of your loan, plus fees and court costs. You could also damage your credit score and have difficulty securing transportation in the future.
To avoid car repossession, keep up with your loan payments and be mindful of your financial situation. If you’re struggling to make payments, contact your lender to explore your options.
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